How does sea freight work?

Sea freight is mediated by freight forwarders. They get involved as a third party and pick up, organize and deliver your goods. In this entire process — there are a few notable things to remember. One of the most important things is reading the shipping contract.

Now, most business owners often flip through the pages recklessly. And we would like to prevent you from making inconvenient choices, so we strongly suggest knowing about the contract in-depth. Bound together by international commercial terms (incoterms), the contract runs on standardized norms for every party.

Some of the incoterms used frequently include –

FOB (Free On Board)

The FOB agreement means that both parties (you and the freight forwarder) share responsibility for the delivery process. Forwarders take on obligations to make sure their goods are packaged and labeled appropriately. This happens before loading the cargo onto a shipping vessel. It then becomes yours once it arrives at your location. However, this transfer happens only after all necessary steps are taken by each party in accordance with regulations set out during contract negotiation — there’s no risk involved.

EXW (Ex Works)

With an EXW contract, the majority of the responsibility falls on you. You’re responsible for picking up goods at their forwarder’s location and transporting them to the final destination – this means checking in with carriers along your path if necessary!

DDP (Delivered Duty Paid)

DDP is a great way to get your items delivered with minimal hassle. Freight forwarders take on all responsibility, while you (the shipper) only have their shipping costs covered by this program — pretty much guaranteeing an easy sale!

These were a few terms to give you a surface-level idea about the context. You can always feel free to delve deeper personally if you feel curious about it!

The further process gets a little technical. The contract is followed by stages like export haulage, exports custom clearance, origin handling, and many more. But let’s not overwhelm you with that for now. And let’s stick to our aim of getting acquainted with the idea of sea freight.